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November 14, 2024

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BOEM Designates Gulf of Maine Wind Energy Area

Federal regulators have finalized their proposed wind energy area (WEA) in the Gulf of Maine. 

The zone has been trimmed, slashed and reshaped repeatedly since the U.S. Bureau of Ocean Energy Management began to gauge commercial interest in a 13.7-million-acre zone south of Maine. 

After carveouts to avoid fishing and lobstering grounds, key wildlife habitats and cultural resources, the final WEA that BOEM announced March 15 totals approximately 2 million acres. 

Even with the reductions, the area is believed to hold the potential for up to 32 GW of offshore wind development. 

The WEA is 23 to 92 miles from land and stretches across water far too deep for wind turbines with fixed-bottom foundations, like those being built farther south along the New England coast. 

Wind power development in the Gulf of Maine would rely instead on floating turbine technology that is being refined, including at the University of Maine. Maine hopes to be a leader in this new subsector and is separately pursuing BOEM approval of a research lease to place up to a dozen floating turbines closer to shore. 

With the WEA finalized, BOEM will assess the potential environmental impacts of wind power development there and decide whether to proceed to leasing. 

Multiple public comment periods have been opened so far, and more are yet to come. BOEM said this engagement has helped shape the WEA and will continue to be incorporated into the plans. 

Maine’s governor and congressional delegation had pressed BOEM to remove a key lobster management area from the WEA. In a joint statement March 15, they said: 

“We appreciate that the Bureau has heeded our concerns and the majority of the concerns of Maine’s fishing communities in its final designation of wind energy areas for the Gulf of Maine. This decision preserves vital fishing grounds and seeks to minimize potential environmental and ecological impacts to the Gulf of Maine. We look forward to reviewing the final map in detail and urge the Bureau to continue to engage with Maine’s fishing industry, coastal communities, tribal governments, and other key maritime users and stakeholders as the commercial leasing process moves forward.” 

As indicated in their statement, not every stakeholder priority was entirely addressed. 

The Maine Lobstermen’s Association told local media it appreciated some of the most important fishing areas being removed from the final WEA but said too many unanswered questions remained about the impact of wind power development in the Gulf of Maine. 

New England for Offshore Wind said more efforts are in progress to avoid and minimize use of areas of historic and cultural significance to Maine’s tribal nations. 

Maine Audubon said the announcement was an important step in the right direction, but it would pursue more wildlife safeguards. 

But overall, many labor and environmental advocacy groups were pleased with the WEA. 

“Maine is setting an example for the rest of the nation for responsibly developing offshore wind, balancing the needs of coastal communities and wildlife protection with the urgency to address climate change — the greatest threat facing our woods, waters, trails and coastlines,” said Jack Shapiro of the Natural Resources Council of Maine. 

“BOEM’s announcement today reflects a major step forward for responsible and equitable offshore wind development in the Gulf of Maine,” said Kelt Wilska of New England for Offshore Wind. “New England is once again setting a national model for reducing potential conflicts during project construction and respecting the critical role that heritage fishing industries play in our economy.” 

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LPO Announces $72.8M Loan for Tribal Microgrid

The Viejas Band of Kumeyaay Indians could soon be powering their casino, resort and retail complex east of San Diego with a microgrid combining solar and long-duration storage, with the help of a $72.8 million loan guarantee from the Department of Energy’s Loan Programs Office (LPO). 

Wahleah Johns, director of the DOE Office of Indian Energy, announced the LPO’s conditional commitment for the loan March 13 at the 2024 Reservation Economic Summit in Las Vegas. Currently under construction, the Viejas microgrid will combine 15 MW of solar with 38 MWh of long-duration, non-lithium storage and is the first loan the LPO has made under its long-dormant Tribal Energy Financing Program, Johns said in a video posted to LinkedIn. 

Power from the microgrid will replace electricity the tribe buys from San Diego Gas & Electric, generated from natural gas, nuclear, coal and renewables, according to a DOE email to NetZero Insider. The solar will be installed on carport structures, and the storage system will include two types of long-duration batteries: 10 MWh of vanadium flow batteries provided by Invinity and 28 MWh of zinc-based batteries from Eos Energy. Both can provide up to 12 hours of power, according to the companies’ websites. 

The project also received a $31 million grant from the California Energy Commission in 2022. 

The California wildfires and resulting power outages of 2020 were the original impetus for the project, along with concerns about the fire hazards of lithium-ion batteries, according to a case study on Invinity’s website. 

The tribe will purchase electricity from the project through a long-term power purchase agreement, according to the LPO announcement of the loan. 

The Viejas microgrid “will allow the tribe to benefit from lower energy bills and use those savings [toward] investment by the tribe in infrastructure maintenance, operation of the fire department, tribal culture and education programs, and other tribal member services,” Johns said. 

The project also represents a model of tribal collaboration, Johns said, with the developer, the 100% Indian-owned Indian Energy, partnering with the Turtle Mountain and Sault Ste. Marie bands of Chippewa Indians. 

“It is incredible to see tribes investing in other tribes … and speaks to the energy sovereignty here,” she said. 

Speaking at the summit, Kevin Carrizosa, a member of the Kumeyaay tribal council, similarly stressed the connection between energy independence and tribal sovereignty. The loan would provide “the necessary financial runway to launch not just our project but countless other tribal microgrids,” he said. 

It also represents “truly tangible value that’s being provided by the U.S. federal government in support of Native America and our perseverance toward sovereignty,” said Allen Cadreau of Indian Energy. Sustainable energy projects like the microgrid “provide a means of maintaining our traditional way of life.” 

The Tribal Energy Financing Program was first authorized in the Energy Policy Act of 1992 but was not funded by Congress until 2017, according to the loan announcement. DOE opened its first solicitations under the program in 2018 and has increased its outreach efforts to tribes, many of which have never applied for funding from federal programs, according to a department email. The Inflation Reduction Act increased the program’s loan authority from $2 billion to $20 billion. 

A conditional commitment is the first step in LPO’s process for financing projects. According to the announcement, the Viejas microgrid will have to reach specific milestones and meet technical, legal and financial conditions before the loan is finalized.

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RSTC Speaker Urges Industry Effort on BESS Safety

SAN DIEGO — When the McMicken battery energy storage system (BESS) caught fire and exploded due to thermal runaway in April 2019, its operator, Arizona Public Service, opted for maximum transparency.  

The utility published a full internal report on its website while collaborating with NERC on a Lesson Learned document that laid bare far more details of the event than are usually found in such reports. (See NERC Warns of Batteries’ Hidden Thermal Risk.)  

For Anthony Natale, director of risk and response at consulting firm Fire & Risk Alliance, APS’ response has been exactly what a utility should do after an experience like this. 

“I can tell you, in working with APS, they’ve made a 180 — they do a tremendous amount for the fire service, a ton of testing, and really have come back and lead with safety,” Natale said at a March 14 meeting of NERC’s Reliability and Security Technical Committee. 

But Natale’s goal was not to praise APS, but to observe how much still needs to be learned about fire safety at BESS facilities. Thermal runaway is better understood after the McMicken incident, but the industry has a long way to go to fully mitigate the risks associated with grid-connected batteries.  

One challenge associated with a new grid resource — particularly batteries, which can act as load and generation at different times — is a lack of established performance assessment techniques. While many manufacturers use a common set of tests for their products, Natale suggested those tests don’t always predict a unit’s performance.  

As an example, he showed a picture of a BESS facility that underwent the UL 9540A test, which is meant to determine if a single-unit battery fire will spread. In this case, the damage was isolated to a single unit, but things did not work out so well in practice. 

The unit that underwent the test “did exactly what it’s supposed to do: failed, and did not [pass the fire on to] the adjacent units. However, in real life, in Warwick, New York, it ran through the entire array,” Natale said, referring to an incident at two BESS facilities using the same type of equipment where nearly an entire module was destroyed by flames.  

“So these are the things we want to avoid. … It’s great to do the minimum level of testing, but let’s look at selecting a manufacturer that goes above and beyond,” he said.  

Battery Aesthetics

Natale emphasized that he is not calling on manufacturers to stop using industry-standard tests like UL 9540A, which still play a valuable role in providing utilities a baseline performance measurement. Rather than throwing out existing tools, BESS makers can look at what they can do to forward the state-of-the-art, he said.  

He recalled a test that Tesla conducted on one of its BESS products in which the company deliberately allowed a unit to fail and burn for eight hours in high-wind conditions. That technique could address the lack of accounting for wind in testing approaches, he said. 

Natale also encouraged utilities pursuing battery projects to reach out proactively to communities they operate in. Fire departments are obvious targets for communication, as they will have to sign off on the safety of any proposed BESS facility.  

But entities must also be prepared to make the case to locals who are concerned about safety of battery systems after seeing incidents like the McMicken and Warwick fires. Natale mentioned one community in which citizens “had shirts made up [and] showed up with pitchforks [and] torches” to oppose the local utility’s plans to install a BESS facility nearby. 

“It’s not going to work; you’ve really got to give it your [all] or you’re wasting your time,” he said.  

Utilities must show they understand citizens’ concerns and are willing to address them. In some cases, he said, communities have been satisfied with simple gestures like disguising a facility as something prettier, like a house. 

“If you really have to cite [a BESS facility] somewhere, then take the time to talk to these people and say, ‘Maybe we can make this aesthetically pleasing, and it will work,’” Natale said. 

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NYISO Business Issues Committee Briefs: March 13, 2024

Co-located Storage Resources

The NYISO Business Issues Committee on March 13 approved proposed tariff changes to allow energy storage resources (ESRs) co-located with a dispatchable generator behind a single point of interjection to participate in the markets.  

The revisions would expand the list of resources eligible to be included in the ISO’s co-located storage resource (CSR) models. The proposal is part of the wider ongoing hybrid storage resource (HSR) effort, which was approved by stakeholders in 2022 with the aim of incentivizing developers to couple generators with ESRs and integrating aggregated HSRs into NYISO’s markets. (See “Hybrid Storage Resources,” NYISO Management Committee Briefs: Dec. 21, 2022.) 

Graphic representation of energy storage resource co-located intermittent power resource | NYISO

Each unit within the expanded CSR model will have a distinct single point identifier, bid, schedule, settlement and its own participation model. The ISO already has updated the CSR model to include additional use cases, such as limited run-of-river hydro and landfill gas, but these changes will require further modifications and an additional compliance filing to align with FERC Order 2023.

NYISO has been developing changes to its energy market products, including a hybrid pricing scheme for CSRs and a ramping product, to account for the capabilities of fossil fuel peakers slated for retirement in 2025. Recently, it announced plans to study how hydrogen could fit in its marketplace as an emissions-free generator co-located with a load resource and whether this could be facilitated through new or modified participation models. (See Hydrogen Getting Resource-specific Rules in NYISO Markets.) 

NYISO will seek approval from the Management Committee of its proposals at the March 27 meeting and plans to file them in the second quarter of this year. 

PSEG Power’s Howard Fromer sought clarification on the timeline, asking if the changes approved in 2022 already had been presented to the ISO’s Board of Directors. 

Katherine Zoellmer, a market design specialist with NYISO, responded that the board has not yet reviewed the previously approved changes but will do so once the CSR proposal is approved. 

February Market Operations

NYISO Senior Vice President Rana Mukerji presented the February market operations report to the committee, noting that the month’s average locational-based marginal price (LBMP) of $31.33/MWh was lower than January’s $65.76/MWh and the $55.47/MWh observed in February of the previous year. He attributed these declines to the higher temperatures experienced throughout this year’s milder winter conditions. 

February’s average energy cost was 0.6% higher than the previous year, increasing from $52.36/MWh to $52.70/MWh. 

Mukerji also noted the continued decline in natural gas prices. The natural gas index price at Transco Z6 NY was $1.71/MMBtu in February, down from $6.37/MMBtu in January, with year-over-year gas prices declining by 73.2%. 

Vote on Net EAS Revenue Proposal Postponed After Stakeholder Protests

The BIC was slated to vote on NYISO’s proposals to use five-minute real-time LBMPs for estimating the net energy and ancillary services (EAS) revenue earnings of peaking plants as part of the capacity market demand curves reset determination, but it was postponed after stakeholders expressed multiple concerns. 

NYISO’s proposal would allow the use of a five-minute real-time dispatch (RTD) in the net EAS model and expand the existing allowable adders for net ancillary services revenue not determined by the model to include potential net real-time energy revenues. 

The ISO argued that the operating characteristics of certain technologies as they evolve may warrant the consideration of using five-minute real-time prices instead of hourly prices for estimating net EAS revenue. This adjustment would provide NYISO with the flexibility to modify how these technologies are treated in each reset. 

The reset is a quadrennial process for reviewing and adjusting the demand curves in NYISO’s capacity market to ensure they accurately reflect current costs and market conditions in New York. 

According to a stakeholder who agreed to speak with RTO Insider on the condition of anonymity, NYISO decided not to proceed with a vote on the proposal because of concerns it would be rejected, after it received many emails from stakeholders complaining about the rapid pace of the proposal process — two weeks from proposal to stakeholder approval — and a lack of analysis on the potential market impacts of the proposed tariff changes. 

Stakeholders had requested an evaluation of the proposals’ impacts by NYISO’s Market Monitoring Unit (MMU) at previous meetings, but the ISO proceeded with the expectation a vote would occur at the morning’s BIC meeting. 

At the Installed Capacity Working Group’s meeting later that afternoon, the MMU presented its preliminary assessment and methodology for examining the ISO’s proposal to use five-minute real-time prices in the net EAS revenue model for energy storage and assessing the potential to develop an alternative solution for considering the potential impact of five-minute real-time prices if the model continues to use only hourly prices. 

Mark Younger, president of Hudson Energy Economics, captured the confusion and reluctance expressed by many stakeholders, saying, “The concern I have, at the moment, is that we don’t know enough about what you’re proposing to do, nor all of the [proposal’s] details, to go ahead and bless putting it into the tariff.” 

Doreen Saia, an attorney with Greenberg Traurig, echoed that sentiment, saying, “I just don’t get it” and “to me, it seems inherently flawed.” 

NYISO intends to maintain the schedule for the 2025/29 DCR and initiate the reset no later than this month. It will seek stakeholder approval of the proposed concepts at the BIC’s March 19 and MC’s March 27 meetings, but the MMU indicated its final analysis of the proposals would not be completed and presented until April. 

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Shapiro Proposes Cap-and-trade, More Renewables for Pa.

Pennsylvania Gov. Josh Shapiro (D) on March 13 announced a new state energy plan he says will ramp up renewable production and save ratepayers $252 million while generating $5.1 billion in clean energy investments. 

The Keystone State is home to the nation’s first oil well and civilian nuclear reactor, but Shapiro’s office said it’s now falling behind other states in diversifying energy sources.  

Shapiro’s legislative plan aims to change that by establishing an emissions reduction program that will create a resilient electricity grid by 2035, attract more federal dollars, and support clean nuclear and low-carbon natural gas-fired generators. 

“From the very beginning, I have made clear that any energy policy supported by my administration must meet the three-part test of protecting and creating energy jobs, taking real action to address climate change pollution and ensuring reliable, affordable power for consumers in the long term,” Shapiro said in a statement. “My energy plan is built to do all three, making sure the first dollar goes to Pennsylvania ratepayers and ensuring Pennsylvania will continue to be a leader on energy for decades to come.” 

The governor is proposing the Pennsylvania Climate Emissions Reduction Act (PACER) to set up a cap-and-invest program that would take the commonwealth out of the Regional Greenhouse Gas Initiative and allow it to set its own cap on emissions. 

Seventy percent of PACER’s benefits would be returned to end-use customers as rebates on their electric bill — a higher percentage than any cap-and-trade program in the country. PACER also would support projects that cut air pollution, further reduce customer energy bills and invest in new job-creating clean energy projects, including carbon capture and storage, geothermal, and clean hydrogen. 

Shapiro also proposed a new renewable portfolio standard under legislation called the Pennsylvania Reliable Energy Sustainability Standard (PRESS), which builds on the state’s existing Alternative Energy Portfolio Standards (AEPS). It adds nuclear power and next-generation technologies like fusion and clean-burning forms of natural gas. 

PRESS would require Pennsylvania to get 50% of its electricity from a diverse range of resources by 2035, including 35% from clean resources such as solar, wind, small modular reactors and fusion; 10% from sustainable sources like hydropower and battery storage; and 5% from “ultra-low emission” forms of natural gas and other traditional fuels. 

PACER and PRESS are meant to work together to deliver the governor’s goals of protecting and creating energy jobs, cutting costs, and ensuring energy independence. Shapiro also wants legislators to create legal and regulatory frameworks around carbon capture and storage. 

Democratic Support, Republican Opposition

Shapiro’s office released a supporting statement from leaders in the state’s Democrat-controlled House of Representatives. 

“House Democrats are committed to reducing harmful greenhouse gas emissions while strengthening our economy and energy infrastructure, investing in our communities, and cutting costs for families,” their statement said. “Governor Shapiro has brought together many different sectors to explore how Pennsylvania can be a clean energy leader, and today’s announcement represents a step forward toward that goal.” 

While Democratic leaders in the Republican-run Senate also voiced support for the legislation, the body’s majority leader, Sen. Joe Pittman (R), came out against a cap-and-trade program. The senator has opposed the state’s membership in RGGI, the subject of a state court case. 

“It now appears the governor agrees with the Commonwealth Court’s ruling asserting a cap-and-trade program for electric generation is a tax on electricity and would require legislative approval,” Pittman said. “The governor correctly points out it is time we stop losing to Ohio, however, any cap-and-trade program applying solely to electric generation in Pennsylvania and not our competitors, does not fit the bill.” 

He added that any energy policy changes in Pennsylvania must prioritize generation, grid reliability and consumer affordability. 

Pennsylvania Public Utility Commission Chair Stephen DeFrank expressed support for the plan. 

“The PUC stands ready to work with Gov. Shapiro’s administration and the General Assembly to implement a comprehensive energy policy,” DeFrank said in a statement. “We are at a very critical point in energy transition for our state, our nation and globally and it’s incumbent upon all parties to work together to develop new solutions. The commission has implemented provisions of the AEPS Act for two decades, and we understand it is time to take the next positive and important step for this commonwealth, while giving our consumers a voice in the process.” 

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First Large US Offshore Wind Farm Complete

For the first time, a utility-scale wind farm is fully operational in U.S. waters. 

All of South Fork Wind’s turbines are sending electricity to the New York power grid. The announcement March 14 is a milestone for the struggling industry which advocates hope will help pave the way for many more. 

New York Gov. Kathy Hochul (D) and U.S. Interior Secretary Deb Haaland threw a supersized ceremonial light switch to mark the occasion. 

“Today is further proof that America’s clean energy transition is not a dream for a distant future — it’s happening right here and now,” Haaland said. 

Hochul said: “With more projects in the pipeline, this is just the beginning of New York’s offshore wind future and I look forward to continued partnership with the Biden administration and local leaders to build a clean and resilient energy grid.” 

N.Y. Gov. Kathy Hochul (D), left, and U.S. Interior Secretary Deb Haaland throw the symbolic switch on South Fork Wind, which announced March 14 that it is fully operational. | New York Governor’s Office

South Fork’s value is symbolic as much as electrical. 

It consists of a dozen turbines and a single offshore substation with a nameplate capacity of only 130 MW and a capacity factor of just 47%. 

But it is built, operating and wrapping up its commissioning process. 

Developers of the rest of New York’s offshore wind portfolio have canceled their offtake contracts in the past year, and developers canceled multiple projects or contracts north and south of New York, as well. 

Soaring construction costs in 2022 and 2023 made previously negotiated contracts with fixed power revenue untenable. First movers South Fork and Vineyard Wind 1 were far enough along in procurement when costs started rising that they could proceed to construction. 

The sector is attempting a rebound, albeit at a much higher cost to ratepayers. 

In the past few months, New York has tentatively awarded new contracts to two canceled projects and three new projects — the total capacity of all five would be 5,766 MW. (See Sunrise Wind, Empire Wind Tapped for New OSW Contracts.) 

New Jersey awarded two contracts totaling 3,742 MW in January. (See NJ Awards Contracts for 3.7 GW of OSW Projects.) 

A 6,000-MW joint solicitation by Connecticut, Massachusetts and Rhode Island will close March 27. (See Mass., RI, Conn. Sign Coordination Agreement for OSW Procurement.) 

Other bright spots include Revolution Wind, which will be five times larger than South Fork and starts offshore construction later this year; Vineyard Wind 1, which will be six times larger and is under construction; and Coastal Virginia Offshore Wind, which is on schedule for 2026 completion and would be 20 times larger than South Fork. 

Each of the states pressing offshore wind development hopes not only to decarbonize its grid but to create a new sector of its economy centered on offshore wind. 

The critical mass created by construction and operation of so many gigawatts of wind generation would help make that possible. 

Hundreds of Northeastern workers supported South Fork’s construction and hundreds in other regions were involved in assembling the first U.S.-built offshore wind substation. 

The turbines were assembled and staged at the State Pier in New London, Conn.; foundation components were completed at Rhode Island’s Provport; helicopters and surface vessels were based in Quonset Point, R.I.; Long Island firms fabricated the concrete mattresses to shield the underwater cables and install the underground cables; and a western New York firm fabricated specialized steelwork. 

Trade organizations played up the larger significance of South Fork Wind. 

Oceantic Network CEO Liz Burdock said: “The U.S. offshore wind industry now enters a new phase with its first operational commercial-scale wind farm. Now the question is no longer if we can, but how fast we can. A robust collection of U.S. supply chain companies and unions supported development of this project, and the entire U.S. industry should take huge pride in this milestone. The U.S.’s first completed commercial-scale project is providing clean, renewable offshore wind energy to communities and homes.” 

New York Offshore Wind Alliance Director Fred Zalcman said: “As we commemorate the completion of the South Fork Wind Farm, the first of many offshore wind farms to provide New York with clean, emissions-free electric power, let us always remember and replicate the formula that got us here. It takes visionary leadership from local, county and state elected officials; strong commitment and community engagement from civic leaders across the labor, business and environmental spectrum; innovative public policy in transitioning to newer and more sustainable forms of electric generation; and the skill, experience and investment capabilities of leading developers to orchestrate the design and construction of these massive infrastructure projects.” 

Not everyone cheered the announcement. 

Green Oceans President Elizabeth Quattrocki Knight said: “Today’s announcement from Governor Hochul of New York only motivates us to redouble our efforts to protect our oceans and the life they sustain. … Adding a fully activated offshore wind project to the grid will not reduce our reliance on fossil fuels. Instead, the intermittent electricity will cause natural gas plants to operate inefficiently. If we consider the overall carbon footprint of these projects coupled with the environmental harm they will inflict, it is irresponsible to proceed with offshore wind development.” 

South Fork Wind is a joint venture between Ørsted and Eversource, which is selling its share to Global Infrastructure Partners.  

It was approved in 2017 by the Long Island Power Authority. All other proposed offshore wind projects in the state have been contracted by the New York State Energy Research and Development Authority. 

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3rd Circuit Rejects PJM’s Post-auction Change as Retroactive Ratemaking

The 3rd U.S. Circuit Court of Appeals on March 12 vacated FERC’s order allowing PJM to revise a capacity market parameter for the DPL South zone after the 2024/25 Base Residual Auction had been conducted but before the publication of its results, ruling that it constituted retroactive ratemaking, a violation of the Federal Power Act’s filed-rate doctrine. 

PJM sought the authority to revise the locational deliverability area (LDA) reliability requirement for the zone, which covers the Delmarva Peninsula, after preliminary analysis of the BRA showed a nearly fivefold increase in capacity prices. (See P3 Challenges FERC Ruling on PJM Changes to 2024/25 BRA at 3rd Circuit.) 

The RTO attributed the increase to its practice of increasing the reliability requirement for small LDAs when it’s expected that solar resources or large generators could create an elevated need for imports to cover any outages of those resources. PJM had anticipated those circumstances to be present in DPL South, but the expected resources ultimately did not enter into the market, potentially leaving consumers with a sharp jump in capacity prices. 

PJM said the DPL South clearing price would have been about $393/MW-day under the status quo rules, while under the revised reliability requirement the zone cleared at $90.64/MW-day, an increase over the $69.95/MW-day price in the 2023/24 auction. 

The court ruled that PJM’s tariff mandates that auction parameters, including LDA reliability requirements, be posted prior to the auction being conducted. Pointing to precedent set in Oklahoma Gas & Electric Company v. FERC, the court wrote that a change is retroactive when it affects a past action that resulted in a legal outcome.

“The relevant inquiry is simply whether the tariff amendment alters the legal consequences attached to past actions,” the court said. “The tariff is clear that PJM’s calculation and posting of the LDA reliability requirement carried a legal consequence. … That simple instruction means what it says: The calculated and posted LDA reliability requirement cannot be altered outside of the limited circumstances enumerated in the tariff. Adjusting for certain resources’ lack of participation was not one of them.”

To change the DPL figure, FERC had approved PJM revising its tariff to exclude planned generation capacity resources from the calculation of an LDA’s reliability requirement if the addition of such resources increases the requirement by more than 1% and the resources do not enter a sell offer into the auction. The court limited its ruling to vacating FERC’s order as to the 2024/25 BRA, leaving the changes in place for future auctions. 

FERC argued in its order and before the court that because no capacity obligations had been assigned nor clearing prices determined, revising the parameter would not change any standing rates. Commissioner James Danly dissented from the 3-1 order, arguing the order was a retroactive rate change that would cause market dysfunction by undermining investor confidence in the predictability of the rules by which PJM runs its markets and how the commission regulates them. He predicted the order would be challenged and ultimately vacated by the courts (ER23-729). 

The commission also argued PJM tariff language allowing it to conduct the auction while “minimizing the costs of satisfying the reliability requirements” justified the change. But the court said that would hold the broad goal of minimizing costs over the specific requirements detailed in the tariff’s ordering of the steps in administering the auction. 

While there are circumstances under which the tariff permits PJM to revise the reliability requirement after the auction has closed, the court ruled those are limited and specifically enumerated exceptions. Applying tariff provisions allowing for correcting errors in the auction results would render specific provisions moot in favor of broad language, it said. 

The Electric Power Supply Association (EPSA) applauded the court’s decision, saying it preserves certainty in PJM’s markets. 

“EPSA is pleased that the court so quickly and definitively resolved the questions raised here: that the filed-rate doctrine bars FERC from changing auction rules after the fact. The importance of certainty cannot be overcome based on an arbitrary decision to change the outcome of an auction,” EPSA CEO Todd Snitchler said. “Looking ahead, market operators would be well served to operate consistent with the tariff. If changes are needed, market operators should apply them prospectively as has been the practice for decades and as the filed-rate doctrine requires. Doing so will only help to ensure participants’ confidence in the market’s operation.” 

A PJM spokesperson said the RTO is reviewing the decision and would not comment. 

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DOE Announces $750M in Clean Hydrogen Funding

The U.S. Department of Energy wants to reduce the cost of producing clean hydrogen and hydrogen fuel cells with $750 million in funding for 52 projects across 24 states, all aimed at advancing electrolysis technologies and manufacturing and recycling capabilities for clean hydrogen, according to a March 13 announcement. 

The goal for the projects receiving the awards from the Infrastructure Investment and Jobs Act (IIJA) is to ramp up manufacturing of electrolyzers to produce up to 1.3 million tons of clean hydrogen yearly and boost the production of fuel cells, which run on the clean hydrogen, by 14 GW yearly. 

The increased production of fuel cells alone could power 15% of the medium- and heavy-duty trucks sold in the U.S. each year, according to the announcement. 

Electrolyzers produce hydrogen by splitting water molecules into their components of hydrogen and water. For hydrogen so produced to be clean, or green, as it is commonly called, the electrolyzers have to be powered by zero-emissions renewable or nuclear energy.  

Medium- and heavy-duty trucks powered by hydrogen fuel cells are being rolled out as an alternative to electric trucks due to their comparative ease of fueling and potentially longer range. For example, the Nikola Corp. has a battery-electric heavy-duty vehicle with a range of 330 miles and a charging time of 90 minutes.  

The company’s fuel-cell model offers 500 miles of range and takes 20 minutes to refuel, according to Nikola’s website. 

The awards range from a low of $2.4 million for Georgia Tech Research Corp. to develop materials that will lower costs and boost efficiency of electrolyzers, to $50 million for Nel Hydrogen US, which is working toward fully automating electrolyzer manufacturing that, in turn, could improve electrolyzer design.  

As quoted in the announcement, Energy Secretary Jennifer Granholm said the new funding will propel “an American-led clean hydrogen economy that is delivering good paying, high quality jobs and accelerating a manufacturing renaissance in communities across America.” 

The IIJA allocates $1.5 billion for clean hydrogen and fuel cells, so this announcement represents half of that funding, with $500 million going to electrolyzers and $250 million to fuel cells.   

DOE sought funding proposals across six highly technical categories, such as “low-cost, high-throughput electrolyzer manufacturing” (eight projects, $316 million) in which selected projects “will conduct [research, development and demonstration] to enable greater economies of scale through manufacturing innovations.” 

The other categories are: 

    • Electrolyzer component and supply chain development (10 projects, $81 million) to support U.S. manufacturing and development needs for core electrolyzer components. 
    • Advanced technology and component development (18 projects, $72 million) to demonstrate new materials, components and designs for electrolyzers that can “enable cost reductions and mitigate supply chain risks.” 
    • Advanced manufacturing of fuel cell assemblies and stacks (five projects, $150 million) to support “RD&D that will enable diverse fuel cell manufacturers to flexibly address their greatest scale-up challenges and achieve economies of scale.” 
    • Fuel cell supply chain development (10 projects, $82 million) to “address critical deficiencies in the domestic supply chain for fuel cell materials and components.” 
    • Recovery and recycling consortium (one project, $50 million) to establish a consortium of industry, academia and national labs to develop new approaches to recovering and recycling of clean hydrogen materials and components. The consortium is being led by the American Institute of Chemical Engineers, with 15 other members.  

A map of the projects chosen to begin contract negotiations with DOE shows a heavy concentration of projects in New York and New England, but North Dakota, Kansas and Oklahoma each scored one project.  

Full-court Press

The Biden administration has bet big on clean hydrogen, which “is set to play a vital role in reducing emissions from our most energy-intensive and polluting sectors … such as heavy-duty transportation and industrial and chemical processes like steelmaking and fertilizer production,” according to the DOE announcement. 

Clean hydrogen, produced with excess wind, solar or nuclear and stored or put to other uses, is also being promoted as a potential long-duration storage technology. 

However, figures in a recent DOE report show that about 95% of the hydrogen produced in the U.S. today uses natural gas as a feedstock. The cost to produce clean hydrogen via electrolysis remains high ― between $5 and $6/kg versus $1 to just over $2/kg for hydrogen produced from natural gas or other fossil fuels. 

The latest funding announcement is part of the administration’s full-court press on clean hydrogen, which is widely seen as an emerging technology offering the U.S. an opportunity to show off its innovation chops and lead the global market. The IIJA also provided $7 billion for seven regional hydrogen hubs, announced in October, although two of the hubs plan to use natural gas with carbon capture and a third will use a mix of natural gas, nuclear and renewable energy. (See DOE Designates Seven Regional Hydrogen Hubs.) 

Another $1 billion from the IIJA will be used to build up market demand for clean hydrogen, while the Inflation Reduction Act provides a generous tax credit of up to $3/kg for clean hydrogen. (See DOE to Invest $1 Billion to Build Demand for Clean Hydrogen.) 

Environmental groups continue to express skepticism about hydrogen. After the hydrogen hubs’ announcement, some advocates called for a refocus on renewables like wind and solar, while others said using natural gas with carbon capture should be called “fossil hydrogen with carbon capture.” (See Hydrogen Hub Announcement Draws Praise and Scorn.) 

The 52 projects announced March 13 target some of the underlying manufacturing challenges in the clean hydrogen supply chain. For example, common electrolyzer components, called proton exchange membranes (PEMs), use both platinum and iridium, a byproduct of platinum mined mostly in southern Africa.  

The Mott Corp. in Farmington, Conn., is up for a $10 million award to develop nonplatinum group metals for electrolyzers. 

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NERC RSTC Briefs: March 12-13, 2024

Kelly Praises Committee as ‘Kitchen’ of ERO

SAN DIEGO — In her first address to NERC’s Reliability and Security Technical Committee since being named the committee’s board liaison last month, NERC Trustee Sue Kelly asked attendees at the committee’s first meeting of 2024 in San Diego to “bear with me” as she adjusts to her new role. 

Kelly, who previously served as the Board of Trustees’ liaison to the Standards Committee, likened the RSTC to the “kitchen” and the SC to the “front of the standards development house,” meaning the work of both committees is vital to maintaining the ERO’s reputation for “technical excellence.” 

From left: RSTC vice-chair John Stephens; Mark Lauby, NERC; NERC Trustee Sue Kelly | © RTO Insider LLC

“In many respects, you are NERC’s brain trust,” Kelly said. “You do the complicated but vital work that underpins NERC’s standards, guidance, white papers [and] assessments. The reliability issues we are dealing with now are incredibly complex, and we need all the gray matter we can get to apply to these challenges. So, we on the board very much appreciate the efforts that all of you dedicate to this work.” 

The RSTC’s next meeting will take place June 11-12 at Amazon’s headquarters in Seattle, and will be a joint gathering with the SC. Committee members will participate in person, while all others attend online. Its Sept. 11-12 meeting at the headquarters of Hydro-Québec in Montreal will be hybrid as well, and the final meeting of the year, Dec. 11-12, will be fully virtual. 

IBR, DER SARs to Receive Comments

RSTC members endorsed or accepted multiple draft standard authorization requests, reliability guidelines and white papers during their two-day meeting. 

The first SAR was brought to the committee by NERC’s Inverter-based Resource Performance Subcommittee (IRPS). NERC Senior Engineer Alex Shattuck told attendees the IRPS developed the SAR in response to FERC’s Order 901, issued in October, which directed NERC to develop rules addressing IBR data-sharing, model validation, planning and operational studies, and performance standards. (See FERC Orders Reliability Rules for Inverter-Based Resources.) 

The SAR would authorize NERC to update reliability standards FAC-001-4 (Facility interconnection requirements) and FAC-002-4 (Facility interconnection studies) to ensure that transmission operators, balancing authorities and reliability coordinators that identify IBR performance issues can work on corrective actions with generator owners. Members voted to accept the draft SAR and post it for a 30-day public comment period, to begin March 18. 

NERC’s System Planning Impacts from Distributed Energy Resources Working Group (SPIDERWG) brought forward the other SAR, intended to clarify the definitions of operational planning analysis (OPA) and real-time assessment (RTA) in the ERO’s glossary of terms to “explicitly include aggregate DERs as a component of both” definitions.  

SPIDERWG Chair Shayan Rizvi explained the goal of the SAR was to bring “enhanced clarity to situational awareness and [reduce] operational risk,” noting that “DERs have contributed to grid disturbance events” and that clarifying the definition would help grid operators identify and react more efficiently in emergency situations. Members voted to approve this SAR for a public comment period, also to start March 18. 

SPIDERWG, Other Groups Submit Papers

RSTC Chair Rich Hydzik | © RTO Insider LLC

The SPIDERWG also brought forward a white paper on coordination strategies between transmission and distribution entities and a reliability guideline to assist grid planners with needed studies of DERs’ impact on reliability. RSTC members accepted the white paper and approved posting the guideline for a 45-day comment period. 

NERC’s Probabilistic Assessment Working Group also brought a paper intended to help grid planners understand the reliability risks posed by extreme weather events, while the System Protection and Control Working Group submitted its paper on transmission relay loadability. The RSTC accepted both papers and agreed to solicit reviewers for two more papers from the SPCWG: one on evaluating IBRs’ compliance with existing standards, the other on transmission system phase backup protection.

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Drop in Wash. Carbon Price Spells Uncertainty for Budget, Gas Costs

Washington’s first quarterly carbon allowance auction of 2024 has thrown two new wrinkles into the economics of the state’s fledgling — and controversial — cap-and-invest program.  

First: The auction cleared at $25.76 per allowance. That’s sharply lower than clearing prices in 2023’s four quarterly auctions, which took a lot of blame for Washington’s high gasoline prices last summer.  

Second: The March 6 auction, results for which were announced by the state’s Department of Ecology on March 13, raised $135.5 million, setting a dramatically slower pace than is needed to reach the $941 million the state predicted it would collect in the first half of 2024.  

Last year the auctions cleared at $48.50 in the first quarter of 2023, $56.01 in the second, $63.03 in the third and $51.89 in the fourth. Those prices were significantly higher than predicted, and cap-and-invest critics blamed them for adding 21 to 50 cents per gallon to Washington’s traditionally high gas prices. 

Washington has always had some of the nation’s highest gas prices due to geographical and economic factors outside the cap-and-invest program. Average gas prices in the state are currently $4.22 per gallon compared with a national average of $3.40, according to AAA. 

High gasoline prices have led conservatives to back a November referendum seeking to repeal the cap-and-invest program. (See Wash. Cap-and-trade Opponents Advance Repeal Petition to Sec. of State.) 

Ecology Department spokesperson Caroline Halter said demand for allowances “remained strong” despite the sharp decline in settlement prices compared with the December 2023 auction. 

“As in past auctions, all available allowances were sold, and there were more bids than available allowances,” Halter told NetZero Insider in an email. An external auction monitor for the sales did not find any evidence of market manipulation and determined that the auction was conducted fairly, she added. 

Washington’s Office of Financial Management said the auction’s $135.5 million in revenue is $108-$110 million less than predicted. The state has raised $1.96 billion in cap-and-invest revenue since last year. 

The OFM noted five quarterly auctions remain in the budget biennium running from May 1, 2023, through June 30, 2025. These include two in June and September that run prior to the November referendum. Three more are scheduled for December, March 2025 and June 2025.  

With the November referendum being a factor in assembling a supplemental budget for July 2024 through June 2025, the state Legislature put language in its budget bills to keep $816 million in cap-and-invest revenue from being appropriated until Jan. 1, 2025, OFM spokesperson Hayden Mackley told NetZero Insider. Consequently, if cap-and-invest is repealed, that $816 million in appropriations would be rendered moot. 

“Regarding gas prices, OFM can’t speak to the effect of the auction on those — we don’t have any insight into or control over businesses’ pricing strategies,” Mackley wrote.  

Gov. Jay Inslee (D) spokesperson Jaime Smith added: “Even as allowance prices were relatively high throughout the fall and winter, gas prices fell to a two-year low, showing how difficult it is to infer direct impacts.” 

Washington is exploring joining the joint California-Quebec carbon market to help bring down auction prices. California-Quebec bid prices increased from $19 in 2021 to $41.76 last month, according to the California Air Resources Board. The results from last week’s auction mean that Washington’s allowance prices have now dropped below California’s for the first time.